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Closing a Merchant Account on the First Visit
I have probably sold somewhere around 300 small individual merchant locations in my career and I would say about 30 to 40 of those came on the first visit where I walked out with signed paperwork. I wanted to give you some tips on when and how to close on the spot. If you […]
I have probably sold somewhere around 300 small individual merchant locations in my career and I would say about 30 to 40 of those came on the first visit where I walked out with signed paperwork. I wanted to give you some tips on when and how to close on the spot. If you are just starting out and going to a lot of small volume businesses, you will find this article very useful.
I. When to close on the first visit. This is a tough one. My general philosophy is that on the first appointment, your goal is to get the statement and that’s it. However, like most rules, there are some exceptions.
- If the merchant has never processed credit cards before. In this case, there is obviously no statement to get; I always try to close these on the spot.
- If the merchant pays less than $100 in total fees or does less than $5,000 per month in revenue. In these cases a delay of several days will only draw attention to the fact that a $20.00 savings wasn’t worth the wait. Also, the only way you are going to get these sales is by bargaining on the fixed costs such as machine rentals, monthly fees, non-pci compliance, etc. You can look at all those without an analysis.
- If the merchant wants to buy. When you are really out selling full time, you are going to run across someone at least once every couple weeks who hates his or her current provider. This merchant is ready to switch, don’t delay the process; do the switch today!
II. Doing an “on the spot” analysis. You need to have some numbers to work with in order to make your case, but you really only need a few. Here are some tips on doing a very basic analysis on the spot.
- Start by taking a look at the statement. If it is too confusing for you, immediately back track with this: “Would you mind if I took this back to my office to do a full cost analysis? How about we meet in a couple days?”
- If it is on simple tier pricing so that you can understand the statement, ( we do interchange plus pricing ) look at the very bottom or last page for the monthly fixed fees. These will be fixed dollar amounts like $5.00, $10.00 or $25.00.
- Ask about the equipment being used. Does the merchant rent, buy or lease? If equipment is rented, you can save money on equipment as well. If the equipment is leased, point out this may not have been the best option. Encourage the merchant not to continue “rewarding” the person who sold them a bad lease.
- Start with the total processing volume(or estimated total processing volume If he or she is not taking cards) and multiply it by 2.5% for large ticket (over $100 per sale) and 3.0% for small ticket (under $40.00 per sale.) Use something in between for mid-size ticket ($41 to $99 per sale.) You will now have a quick estimate of what our total fees would be for this account on Interchange Plus pricing with 40 basis points (0.40%, $0.08 transaction fee and $5.00 statement fee.) So for a small ticket who did $3,400 in revenue: $3,400 x 3.00% = $102.00. In other words, our estimated total fees that month would have been $102.
- Once you have this number, subtract it from what was paid with the merchant’s current company and multiply it by 12. Using the example above and considering $122.00 was paid with their current company: $122.00 – $102.00 = $20 x 12 = $240.
- Now you can say, “Based on the fixed costs we looked at and our average fees for your type of business, we will cut your costs by about $240.00 per year. The more revenue you do, the more we will save you. As long as you keep doing what you did on this statement, you will save roughly $240 per year.” Since I also like to figure the percentage of savings on small volume accounts, I would add in…”That is a savings of roughly 20%.”
“How to Read a Processing Statement” ***Side tip: After you get done pitching the price to an easy-going merchant who has obviously been there for a while, you might want to highlight your local approach to business by saying, “Not only would you be saving money, but most of my clients are very interested in supporting the local small business community. Since my business is based right here in X City, you could just give me a call. I will be able to come right over if you need anything at all. I’m sure customer support and the small business community is important to you, right?”
III. Close the sale. At this point after you have showed the merchant the savings, it is time to close the deal. Use the paperwork to close the deal. Don’t use any corny lines; small business owners will smell a close coming a mile away. Just reach for your notebook and take out the merchant application. Start going through the fees and explain each one. Let the merchant know which ones will affect him or her and in what way. When you get done ask, “Does that all make sense?” Your response to an affirmative answer from the merchant: “Is there any other questions you have for me?” If he says there are not, go back to page one and say, “Ok, great! Now is this a sole proprietorship or a corporation?” “What is the corporate name?” – etc. – continue to fill out page one. The merchant will let you know at some point if he or she is nervous about buying today. In this case back up and find out if there are any questions. If you feel like you are losing the merchant, simply reschedule for another time. I hope that helps you close some deals on the spot.
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